The $10 Million Intervention

MAYOR ANTONIO VILLARAIGOSA put himself squarely in the center of the battle to save the 14-acre South Central Community Garden, orchestrating the behind-the-scenes effort to buy the land from a Brentwood developer. Now it turns out that the mayor’s intervention could end up costing the city anywhere from $2 million to $10 million — even if the garden remains in private hands and is not spared.

Villaraigosa moved two months ago to save the garden, identifying a nonprofit group that could raise the money to buy the property from the landlord. With the farmers facing eviction, the mayor’s appointees at the Port of Los Angeles found a way to stall for time, by allocating up to $80,000 for an option to buy the land — a way of blocking other potential buyers from obtaining the site.

That strategy, and the media sensation created by the farm movement, drew the interest of the State Lands Commission, which wondered why the port is involved in a property so far outside the harbor. Now the L.A. Weekly has learned that the state agency that monitors port spending is also investigating the 1994 transaction that allowed the port to buy the land for $13.3 million, own it for nearly a decade, and then resell it for less than half that amount.

If the State Lands Commission determines that the port had no need for the land, or paid the city of Los Angeles too much for the property, the mayor and the City Council — already struggling with a $271 million budget shortfall — could be forced to reimburse the port for at least a portion of the decade-old transaction.

“To some extent, the purpose of the sale is not as important as whether there was a legitimate port need for the land, and whether they paid a fair market price,” said Paul Thayer, executive director of the state commission.

Villaraigosa spokesman Darryl Ryan said the mayor is not worried by the state review. “This property is right at the Alameda Corridor, and the port would have a definite interest in the property,” he said.

Councilman Bernard Parks, who heads the council’s Budget and Finance Committee, warned that any request for repayment creates problems for the city’s budget deliberations. If the 12-year-old purchase of the garden property ends up costing the city, the council should make sure that the site provides some financial benefit, Parks said.

“In my mind, you don’t take all 14 acres of that land and put it into a community garden where there’s absolutely no ability to reap any tax benefits, community benefits or housing benefits from it,” he said.

To understand how the battle for the garden has taken such a circuitous route, you need to look back a few mayors — specifically, to former Mayor Richard Riordan, a major supporter of Villaraigosa in the 2001 and 2005 elections. Riordan had an oft-recited strategy for getting things done: Better to beg forgiveness than to ask permission. The concept served him well during his first term in office, when he struggled to balance a city budget that had cratered amid the recession of the early 1990s.

With the city’s tax revenue plummeting — a drop caused by the popping of a real-estate bubble, a massive downsizing in the aerospace industry and the 1992 riots — Riordan turned to the harbor department and Los Angeles World Airports, the agency that operates LAX, to balance the budget. Riordan’s administration told the harbor and the airport, which operate as separate government agencies, that they weren’t paying enough of a dividend to the public — and needed to ante up.

But Riordan found one other way to bring in some extra revenue: Instruct the port to buy surplus land at 41st and Alameda streets — the property where the garden now sits. Using eminent domain, the City Council had already seized the land from developer Ralph Horowitz in the 1980s so that it could be used for a city incinerator. When the trash project was abandoned in 1989, former Mayor Tom Bradley proposed that the property become Nehemiah West — more than 300 town homes for low-income residents.

The city sold Nehemiah West the land for $6.6 million in 1991. Two years later, after Riordan took office, the city scrapped the housing project and sold it to the port for nearly double that amount, even though the real-estate market had tanked in the intervening three years.

Why the port needed the property appears as an afterthought in the city’s reports on the transaction. One memo pointed out that since the land stood near the proposed route of the Alameda Corridor, the port could lease it for commercial or industrial purposes. The June 1994 report on the issue provided perhaps a clearer rationale — “to facilitate the city’s receipt of income anticipated for the adopted 1993-94 budget.”

As it turned out, the State Lands Commission woke up a few years later and busted the city for balancing the general fund with port money. In 2001, the last year of Riordan’s term, a legal settlement forced the city to pay the port back roughly $62 million. By then, Riordan’s attempt to tap airport revenue also had been blocked, drawing the ire of the federal government, which threatened to withhold transit funding if the airport diverted revenue to the city.

The one transaction that went unnoticed from the early 1990s was the port’s $13.3 million purchase of the site at 41st and Alameda streets. Now, the battle over South Central Farm has changed all that.

Looking back a decade, it’s not hard to find irony in the correspondence between various city officials. In January 1994, 10 days before the Northridge earthquake, Riordan sent a memo to the head of the port instructing him to buy the land. At that point, even the mayor had noticed the small band of residents quietly farming on the property with the city’s blessing.

“A community issue still exists, in which a local organization is using a portion of the property for agricultural purposes,” Riordan wrote to port executive Ezunial Burts. “We will ensure that this matter is resolved before the port takes possession.”

Obviously, things are taking a bit longer than anyone could have imagined.